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Message Boards Digest

March 16, 2022

Here are the most recently added topics on the BenefitsLink Message Boards:

Benefits 101 created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Form 1095-C as Affected by Lookback Period for Employees Not Employed for Full 12 Months

"If we used a 12 month lookback period to determine 'eligibility,' do we need to issue Form 1095-C to people who were not employed for a full 12 months? See

https://www.irs.gov/affordable-care-act/employers/questions-and-answers-about-information-reporting-by-employers-on-form-1094-c-and-form-1095-c

FAQ question #6 in that document seems to say if they were not a 'full time employee' at any point, we don't need to issue a 1095-C. Because we use that 12 month lookback period to determine 'full time,' it stands to reason that any employee not employed for at least 12 months is categorically NOT full time. Thoughts?"

1 reply so far   |    Click Here to Add a Reply

t.haley created a topic in Cafeteria Plans

Employer Failed to Take Health Premiums Out of Employee Paychecks -- Now What?

"Employee elected health coverage during open enrollment, coverage effective 9-1-21. Employer just discovered premiums were not being withheld from employee's paycheck.

Can the employer begin deducting the cost of the elected coverage now plus an amount to make up the missed deductions?

Because it was the employer's fault, they want to know whether they can just 'eat' the amount of the past-due premiums and begin deducting premiums going forward? Do they need to issue a corrected W-2 for 2021?"

2 replies so far   |    Click Here to Add a Reply

ยง#$%! created a topic in Defined Benefit Plans, Including Cash Balance

IRC 404(a)(7) Limit Applies When Only One of Two in Controlled Group Makes DB Contributions?

"S-corp sponsors a DB plan and sole-prop (spouse) is an adopting employer of the DB plan. Both make over the compensation limit. If the sole-prop (spouse) is the only entity making/deducting contributions into the DB plan (above the minimum funding requirement), can the S-corp. make the maximum profit sharing contribution ($58k) into a DC plan and not trigger the deduction limit under 404(a)(7)?"

4 replies so far   |    Click Here to Add a Reply

EBECatty created a topic in Defined Benefit Plans, Including Cash Balance

How to Exit PBGC Coverage?

"Is there a standard procedure for exiting PBGC coverage (i.e., a pension plan was covered, but is no longer covered) aside from simply stopping premiums? More specifically, a takeover of a private entity plan sponsor by a governmental entity."

5 replies so far   |    Click Here to Add a Reply

AmyETPA created a topic in 401(k) Plans

Mistake of Fact -- Duplicate Deposits Occurred

"Pooled 401k plan. Client deposited the match true-up as instructed in February 2021 (January year-end), then forgets he's done that when reporting is finished in November, so deposits the full true-up again.

I think this could be considered a mistake of fact and hence could be returned to the client or held to utilize for the following plan year. Thoughts?

He's also deposited more than he needs for the 1/31/22 plan year deposits, though room for PS, and I'm thinking he can take out the $11,475.67 that was the duplicate 1/31/21 match true-up but must allocate $8,300 additional deposited during the year as PS. Agree?"

1 reply so far   |    Click Here to Add a Reply

BG5150 created a topic in 401(k) Plans

1099-R(s) for 402(g) Excess

"It's been a while since I've had to deal with a 1099 for a 402g failure. If done by 4/15, does the participant get two Form 1099s? One with code P for the excess and one with code 8 for the earnings? Afterward, it's just one for code 8 for the earnings, right?"

1 reply so far   |    Click Here to Add a Reply

Christopher Wilson created a topic in 401(k) Plans

Excise Tax on Refund of Match Deposited as a Lump-Sum after the End of the Plan Year

"Does the 10% excise tax apply to the post-March 15 refund of a discretionary match that was calculated and deposited as a lump-sum after the end of the plan year?"

1 reply so far   |    Click Here to Add a Reply

ERISA Philomath created a topic in Cross-Tested Plans

Make a Top Heavy Contribution in a Non-Top Heavy Plan

"Would it be permitted to make a Minimum Top Heavy Contribution in a non-top heavy plan?

Plan A - PS Plan with no keys

Plan B - PS Plan with keys

Plan C - CB Plan that includes some from Plan A and some from Plan B (including the key employees)

Plan A requires B/C to pass nondiscrimination.

Plan B/C does not require Plan A to pass nondiscrimination.

Based on this, we would say that B/C forms a required aggregation group but does not need to include A. Plan B/C is Top Heavy. However, the plan sponsor would like to make the minimum Top Heavy contributions for B/C in the two PS plans - this would include making contributions to A for those who are participating in A and C."

1 reply so far   |    Click Here to Add a Reply

mattmc82 created a topic in Plan Document Amendments

Trustee Documents on Cycle 3 restatements

"Because the new rule that says trustee agreements will no longer be pre-approved, I've seen some things I'm not accustomed to. Specifically, I've seen documents executed with the only trust agreement being one for a directed trustee -- so no corporate discretionary trustee and nothing with the employer acknowledging their responsibilities. Perhaps I'm just having amnesia since the last restatement period, but doesn't there need to be something beyond just a directed trustee?"

2 replies so far   |    Click Here to Add a Reply

PS created a topic in Plan Terminations

Stock Acquisition -- Successor Plan Status Here?

"One of the plans is terminating due to stock acquisition and the term date and sale date happens to be the same date: 01/2022. There have been contributions (by employees) coming into the plan until 03/2022, however.

As per their counsel this is not a successor plan and they have filed for VCP. Also, the acquiring company is part of a controlled group and counsel has also stated a consent to terminate the plan was adopted BEFORE closing and before the entity became part of a controlled group with other entities. Couple of things:

  1. Participants from the terminating plan will not be moving into the acquiring plan. Instead they are moving to a new 401k plan that will be set up by using the same EIN.
  2. They could wait to transfer amounts from the old plan to the new plan until the IRS has responded to the VCP filing However, there’s no guarantee of that. If it takes longer than that, they would reevaluate
  3. As per they counsel the plan was terminated BEFORE closing. The options for distributions/transfers will be different for pre-closing contributions and earnings versus post-closing contributions and earnings. Counsel has stated Contributions and earnings for pre-closing payroll period: Participants must be given the right to take a distribution of their accounts for pre-closing contributions and earnings. They will be offered the option to have these amounts transferred/rolled over to the new plan. Contributions and earnings for post-closing pay periods: These should not be distributed. Post-closing contributions and earnings would be transferred automatically to the new plan (if approved by the IRS).

I've handled successor plan previously however this is something completely new, this is something doable? Will there not be a successor plan situation?"

No replies yet   |    Click Here to Add a Reply

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